FCC changes threaten rural access to Internet

By Byron Dorgan

Updated 7:58 pm, Tuesday, August 7, 2012

What do border security efforts in Texas, health care in Kansas and economic development on an Indian reservation in New Mexico have in common?

All three rely on high-speed Internet services provided by small, independent rural telecommunications companies. And the success of all three will depend on the Federal Communications Commission making the right decisions in Washington.

Last year, the FCC began to reform the Universal Service Fund. That's the fund that makes sure even rural and high-cost areas of the country get affordable telecommunications services.

The FCC took apart elements of the USF and began using the money for its new Connect America Fund (CAF), repositioning the funds to support broadband-capable networks. The CAF is the linchpin of the FCC chairman's effort to implement President Obama's national broadband initiative.

Frankly, the idea of a fund to increase the deployment of broadband across the country is a good idea. I'm all for that - but it shouldn't be done at the expense of those areas in rural America that already have made the investment to build out broadband and need to maintain those networks for years to come.

The FCC claims that this reform plan will be good for rural America. But so far, the uncertainty they have created with their rulemaking raises real questions about the future of many rural telecommunications companies.

There have been many breathtaking changes in telecommunications over the past several decades. These days, vital telecommunications services go far beyond basic telephone service to now include video, voice and data delivered over integrated wire line and wireless networks.

But, despite these changes, the need for universal service remains. The question of whether everyone in the country will have access to this essential service remains unanswered. And new questions are being raised by the latest FCC reforms.

In the early days of telephone use, the government knew it would be expensive to reach rural and high-cost areas, so it created a universal service policy to help make that happen. Over the years that fundamental policy has successfully ensured that small towns and family farms, such as the 300-person town I grew up in, had affordable service. Rural carriers have done this and more.

In Texas, Big Bend Telephone provides local sheriff departments in six counties on the U.S.-Mexico border with reliable voice and broadband services and dedicated special access that help these first responders keep their communities safe.

Nex-Tech, a subsidiary of Lenora, Kansas-based Rural Telephone, has built out a broadband network connecting 11 rural hospitals and 14 clinics. This speeds up diagnoses and allows patients to avoid having to make long trips to see a specialist.

On the Mescalero Apache reservation in New Mexico, Mescalero Apache Telecom Inc. has increased tribal residents' access to telecommunications services from less than 50 percent 15 years ago, to almost 100 percent today.

By changing the formula used to support rural carriers, the FCC has put the long-term livelihood and survival of the small companies that deliver universal service - and thus the ability to attract capital for investment in rural broadband - in jeopardy.

As a result of the new FCC plan, some rural carriers will see their support from USF mechanisms cut significantly. In some cases, the model will punish the ones that made decisions to deploy broadband services years ago. Other rural carriers face the prospect of losing USF support if they do choose to make more investments or upgrades to rural broadband networks.

These new rules have essentially frozen new investment and new jobs in rural broadband networks because other rural carriers, seeing the problems the FCC has already caused, understandably don't want to make investments when they may never be able to recover their costs.

Still, the FCC is pressing ahead with additional changes that will threaten the availability and affordability of broadband in more rural communities.

I believe the FCC now needs to stop, catch its breath, and seriously study the effects its current plan has had and will have on rural telecommunications companies.

If the FCC doesn't change course, their actions threaten to literally hang up on rural America.

Dorgan, a former Democratic U.S. senator from South Dakota, is a senior policy advisor at Arent Fox LLP.